Morning Macro 22nd October
Financial market headlines may look healthy with S&P500 and Nasdaq back right to all-time highs but below the headlines liquidity is straining. Regional banks are down 20-30% in the last few weeks, buy-now-pay-later companies down 30-40% and tertiary crypto names also down -30-40%. This is why US 2’s, 10’s and 30-year bond yields are all trending lower, and on medium term cycle lows. In fact, the 30-year yield is now 60bp below May’s ‘sell US debt’ panic.
Other big news of course was the precious metal sell off, gold and silver down yesterday -5.3% and 7.3% respectively, golds biggest fall since 2013. Gold even fell to dead on $4,000 over night before bouncing (yesterday’s high $4,375). But the other key price everyone seems to be missing is the rally in the US dollar. (Chart 1, Bloomberg) The first nine months of 2025 was ‘SELL DOLLAR’ headlines, but now we’ve seen a clear double bottom, and are witnessing another squeeze of a crowded trade.
Bank of England Governor Andrew Bailey warned that the collapses of US firms First Brands and Tricolor could be “canaries in the coal mine” potentially signalling systemic risks…… but central banks have no Liquidity tools for private credit markets.
*TRUMP: AS OF NOV. 1, TARIFFS ON CHINA WILL BE ABOUT 155%
*TRUMP: HIGHER TARIFFS ON CHINA WON’T BE SUSTAINABLE FOR THEM
17:33 – *TRUMP: WILL SEE PRESIDENT XI IN TWO WEEKS IN SOUTH KOREA
17:52 – *TRUMP: MAYBE MEETING WON’T HAPPEN WITH XI
UBS WARNS: RECESSION PROBABILITY NOW AT A STAGGERING 93%
U.S. SERIOUS CREDIT CARD DELINQUENCIES (90+ DAYS UNPAID) SURGE TO HIGHEST LEVEL IN 14 YEARS
WAL 3Q PROVISION FOR CREDIT LOSSES $80.0M, EST. $42.4M
UK CPI unexpectedly stays at 3.8% (est 4.0%), OIS increases chance of a rate cuts with 60bp cuts now priced for the next 12 months.
More debt concerns, this time China whose debt continues to grow. Total debt-to-GDP has soared to a record 336% in Q2 2025 – the highest in its history.
To put things in perspective. Magnificent 7 market capitalization is bigger than the GDP of China. (Chart 2, @MichaelAArouet)
OpenAI is now the world’s most valuable private company, valued at $500 billion.
Prediction Markets Boom as Volumes Surpass 2024 Election – Bloomberg (Chart 3, @C_Barraud, Dune Analytics)
No key data today
